Infectious greed - Frank Partnoy

Enron was an energy trading company. Its business model was hailed as revolutionary. Analysts were unanimous in recommending investors to buy Enron shares. The share price soared to 1,990 dollars in April 2001. Eight months later it all fell apart. It transpired that Enron's accounts were disguised by a raft of off-balance sheet items; that the company had been up to its neck in trading derivatives of such Byzantine complexity that almost no-one understood them; that Enron's top management had made fortunes by selling shares when the price was sky high and when they knew that the company was in danger; and that Enron had spent millions buying political favours in every country it operated. Enron's nasty smell pervaded Congress and reached the Oval office, and the collapse of the company hit banks, pension funds and private investors around the world. But what Enron had been doing was no different to what many companies - aided by their auditors - do all the time, what they put on their balance sheet and what they hide off it, and how they exploit unfathomable derivatives.